Of PGG Wrightson Limited. I'll be chairing this meeting on behalf of our acting chair, U Kean Seng, and I would like to welcome you to our 2023 Annual Shareholders Meeting. Today's meeting is a hybrid meeting, with some attending in person and others via our online platform. Before we get started, there are the standard few housekeeping matters to cover. In the unlikely event of an emergency during the meeting, a warden will direct us to a safe exit. Hotel staff will assist with the evacuation process. In case of a seismic event, please take cover, and staff will advise and assist should we need to evacuate the building. Toilets are located to the left through the doors you entered this room, then follow the signs. We're recording this meeting, and it'll be posted on our website later today.
I confirm we have a quorum, and accordingly, I declare the 2023 Annual Shareholders Meeting open. We'll refer to PGG Wrightson as PGW throughout our presentation today. Today's online meeting is being held via Computershare's online meetings platform, which allows shareholders, proxies, and guests to attend the meeting virtually. All attendees can watch this live webcast of the meeting and read the documents associated with the meeting. All shareholders attending, whether in person or online, can participate in the meeting and submit questions and cast votes. If you're joining us online and have a question to submit during the live meeting, please select the Q&A tab on the right half of your screen at any time. Type your question into the field and press Send. Should you require assistance, you can type your query in the chat function, and one of the Computershare team will reply to your query.
Alternatively, you can call Computershare on 0800- 650- 034. Please note that while you can submit questions from now on, we won't address them until the relevant time in the meeting. Please also note your questions may be moderated. If we receive multiple questions on one topic, they may be amalgamated together. Finally, due to time constraints, we may run out of time to answer all these questions. If this happens, we'll endeavor to answer them in due course via email. Accordingly, I encourage online participants to submit your questions to provide us with the best opportunity to respond. Voting today will be conducted by way of a poll on all items of business. If you're eligible to vote in this meeting, you'll be able to cast your vote under the Vote tab.
Once voting is opened, the resolution will allow votes to be cast. To vote, simply select your voting direction from the options shown on the screen. Your vote has been cast when the tick appears. To change your vote before voting closes, you can select Change Your Vote. You have the ability to change your vote up until the time I declare voting closed, which will be at the close of the meeting. In order to provide you with enough time to vote, voting is now open. The resolution will now be available in the Vote tab. Please submit your vote at any time. The PGW board had one change to its membership during the year. Lee Joo Hai stepped down as Chair and a member of the Audit Committee on July 4, 2023.
U Kean Seng was appointed acting chair and a member of the Audit Committee, and I assumed the role of deputy chair. Mr. Lee retired on 24 October 2023, and the board acknowledged and thanked Mr. Lee for his contributions over his tenure. Before we begin the formal business of the meeting, I'd like to introduce the board, who are all attending the meeting today. Seated alongside me is PGW's Acting Chair, U Kean Seng. In the first row, we also have Independent Director Meng Foon, Independent Director Garry Moore, Independent Director Dr. Charlotte Severne. All members of the executive team are here today. Seated alongside me is PGW's Chief Executive Officer, Stephen Guerin, Chief Financial Officer, Peter Scott, General Manager, Corporate Affairs, Julian Daly, who is also our company secretary.
I'd like to acknowledge other members of the executive team who are in attendance. GM, Retail & Water, Nick Berry, GM, Wool, Grant Edwards, GM, Livestock and Real Estate, Peter Newbold-
Morning.
GM, People and Safety, Rachel Shearer. I'd also like to acknowledge other staff members present here or online. I'd like to acknowledge we have representatives from our share registrar, Computershare, our auditors, Ernst & Young, and BNZ, one of our banking syndicate members. We're also joined by NZ Shareholders Association CEO, Oliver Mander. No apologies have been notified prior to the meeting. Are there any apologies from the floor that we should note? The company secretary has confirmed that the notice of meeting was sent on 26th September 2023, to all registered shareholders and to other persons entitled to receive that notice. I confirm the minutes of the company's previous annual shareholders meeting, held on 18 October 2022, were approved as a true and correct record at the board meeting on 5 December 2022.
The minutes of the meeting are posted on the shareholder information section of our website. The financial statements and the reports of the directors and auditors for the year ending 30 June 2023 are set out in the company's annual report. On 26 September 2023, the annual report was posted on PGW's website and our NZX page, and a copy of the report has been sent to shareholders who requested one. Please note, we will refer to both GAAP and non-GAAP performance measures. We use operating earnings before interest, tax, depreciation, and amortization, or operating EBITDA, as a key measure of performance, and I encourage you to refer to our full accounts for details of how this relates to GAAP measures. I can confirm that 281 shareholders have appointed proxies for the purpose of this meeting in respect of approximately 37 million shares.
I've covered the opening formalities and will now move to the general business of the meeting. I'll begin by providing an overview of the highlights of the 2023 financial year, and then I'll hand over to our Chief Executive Officer, Stephen Guerin. Stephen will provide the financial and operational overview for individual businesses, and he will also summarize how our business is trading for the current financial year to date. I'll conclude by discussing our forecast guidance for the full year to 30 June 2024. An opportunity to respond to questions will follow before we move to the formal business of resolutions that will be put to the meeting for voting. As outlined in the notice of meeting, the business of the meeting comprises one ordinary resolution relating to authorizing the board to determine our auditor's fees. I'll start by discussing our financial performance highlights.
Financial performance highlights for the financial year ended 30 June 2023. Our operating EBITDA was NZD 61.2 million, down 9% on the prior year. Net profit after tax was NZD 17.5 million, down 28% on the prior year. Operating revenue of NZD 975.7 million, up 2% on the prior year. Gross profit of NZD 252.8 million, up 2%. Net cash flow from operating activities of NZD 25.5 million, up 8%. Fully imputed dividends for the year of NZD 0.22 per share. These results were realized with margins broadly in line with the comparative period. This is the second strongest trading performance for the business since PGG Wrightson Seeds divestment. The resilient performance of PGW in volatile market conditions is perhaps the most pleasing aspect of the result.
Strong operating results were generated by most business units, with livestock, wool, and water all experiencing solid demand. Rural Supplies and Fruitfed Supplies again delivered standout performances. The exception was our real estate business, which continues to operate in a difficult market. Macro trading conditions for the year were volatile, with increasing input costs and inflationary pressures, falling commodity returns for our clients, and a wet and cold spring delivering frosts, which affected a number of crops. Two cyclones through late summer also resulted in significant crop and rural infrastructure damage in the North Island. In the context of these market conditions, we're heartened by the performance of the business. We're proud of the way our team responded to the demands experienced in their regions and the extraordinary efforts of many in the way they supported each other, our clients, and their communities in need.
Group operating EBITDA of NZD 61.2 million is a positive result against the challenging backdrop. Rural Supplies and Fruitfed Supplies experienced standout performances, with strong performances in livestock, wool, and water. Revenue of NZD 975.7 million was higher compared to the prior year and was up NZD 23 million or 2% from full year 2022. NPAT in this financial year was NZD 17.5 million, which was down NZD 6.8 million or 28% on last year. Margins were broadly in line with the prior year. The implementation of our PGW group strategy remains a key focus, with the execution of initiatives linked to our eight strategic priorities. Our strategy centers around our why: Being proud of our respected history in the New Zealand agri sector, while concentrated on the future and growth opportunities for the PGW group.
Ultimately, our strategy is to provide superior service and offerings to our clients and consistent growth to our shareholders. This will be achieved by working alongside our clients and advancing the technical expertise we provide to help grow their businesses. The depth of the relationships we have with our clients positions us well to meaningfully contribute to their farming and growing operations. These relationships, based on trust and experience, will become even more important in challenging market conditions. Over the course of the last year, we undertook an assessment of each business unit's strategic initiatives and performance indicators, and tracked these through at a PGW group level. This exercise served to gauge the pace of progress and the desired outcomes of our strategic objectives. For several years, we've tracked and reported against several published results and measures as part of our PGW group strategy.
The measures track our performance in relation to financial performance, safety performance, and customer experience. These measures cover three important areas where we want to grow and improve. This year's results have been impacted by more challenging operating conditions, and we comment on each in turn. Financial performance measures. Our internal financial performance measures include two key indicators. Firstly, we target growth through the cycles in excess of Consumer Price Index, CPI. This is measured by comparing our normalized earnings before interest and tax, or EBIT, growth against the CPI. During full year 2023, we recorded a normalized EBIT growth of -21.3%. We normalize EBIT by excluding non-operating gains or losses and impairment and fair value gains or losses. A second financial measure that we target is to achieve a total shareholder return, referred to as TSR, exceeding 10% per annum.
TSR is calculated annually based on the movement in our share price, plus the dividends paid. The TSR financial year 2023 was flat at 0% below our target. The business maintained a steady dividend at NZD 0.22 per share for FY 2023. Health measure and safety. The health, safety, and well-being of our people is of critical importance to PGW. To track our safety performance, we measure our Total Recordable Injury Frequency Rate, known as TRIFR, performance, so we can demonstrate continuous improvement in our safety outcomes. PGW's TRIFR for FY 2023 was 26.47, and the Lost Time Injury Frequency Rate for FY 2023 was 6.62. These calculations are based on contracted hours worked by permanent and temporary employees, using a base of 1 million hours.
This provides us with an opportunity to address and improve this figure in future years, noting the increase on our FY 2020 baseline is partially explained by an increased focus in FY 2023 on identifying and reporting of injuries. Customer experience measure. A key feature of PGW's success as a business is the trust our clients place in our company, people, and brand. Given customer experience is so important to our continued success as a business, a key objective in our strategy is to target incremental improvement in our PGW Group Net Promoter Scores. These scores are commonly used, or a commonly used measurement of customer satisfaction and loyalty, which is based on a customer's likelihood to recommend a service or business. In FY 2023, our PGW Group NPS was stable and in line with FY 2022.
We consider this as a reasonable and understandable result, given the challenges weighing heavily on farmer confidence and sentiment, such as high inflation, increased interest rates, softening returns, and in some regions, the impact of severe weather events. I'll now ask Stephen Guerin, our Chief Executive Officer, to provide an operational overview.
Thank you, Sarah. Good afternoon, and good morning, everyone. I'm delighted to be here with you today and to give you this operational update. PGW recorded operating cash flows during the year of NZD 25.5 million. This was up NZD 1.8 million on the prior year, noting it included NZD 8.2 million of higher income tax payments related to the exceptional FY 2022 result. PGW invested in working capital during the year, including the implementation of our strategy to grow Go-Stock. This resulted in a balance of NZD 74 million at 13 June 2023, an increase of NZD 7.9 million from 30 June 2022.
Inventories were NZD 5.5 million higher than the prior financial year end, due to more inventory being held owing to the higher sales volumes in the Retail & Water business, and also higher values due to continued supply chain disruptions. Capital expenditure of NZD 17.1 million was NZD 8.4 million higher than the prior year. This increase was driven by investment in our IT systems, our IT systems business improvement program. This includes both operating expenditure and capital expenditure components, and is due to go live in 2024. Our net interest-bearing debt was NZD 65.3 million as at 30 June 2023, an increase of NZD 32.5 million from the prior comparative period. The business improvement program is to simplify our IT systems, is making good progress, with its first phase successfully implemented in July 2023.
The main component of the program is expected to be completed in FY 2024. The benefits expected from the consolidation of systems and renewal of processes include greater efficiency, flexibility, and better utilization of our data, and improved security of our systems. Since the launch of our refreshed Max Rewards loyalty program in November 2022, membership numbers have grown steadily. As well as a brand-new look, our clients have enhanced shopping experience, membership tiers, and access to wider member benefits as part of the program. The Max Rewards program differentiates our client offering in the competitive agri services market. During the financial year, PGW's property maintenance requirements were transitioned to a specialist third-party facilities manager. Using a specialist provider to engage contractors provides us with efficiencies and enhances our capacity to deliver professional repairs and maintenance work with a degree of compliance and assurance.
At 30 June 2023, PGW had 1,572 permanent and temporary fixed-term employees and 323 casual and commission agents, giving us a total of 1,895 people coming every day to work for PGW. Our people are the heart of our business, and our efforts continue to ensure PGW is not only a great place to work, but to develop great people who relate to our clients and local communities in which we operate. Investing in our people is a strategic imperative for PGW, as we support and develop our people to enable them to deliver on our strategy. Three key pillars of this program are our Leadership and Expertise, S afe and Certain, and Recognition, providing the anchors of our people and safety strategy.
We have revitalized our learning and development, our technical training programs, and made ongoing improvements to our safety resources and systems. In the past year, we have concentrated on leadership development, our safety and wellbeing culture, sales training, team culture, and wider range of e-learning courses. We have also delivered on providing opportunities for those showing strength and leadership early in their careers, and those who have displayed the skills and aptitude to enhance their careers by working as part of cross-functional teams on our business improvement program. PGW continues to take a disciplined approach to controlling our critical risks. Our revised health and safety and wellbeing roadmap has made significant progress in the past year by engaging and learning from those who are closest to our critical risks. It was also encouraging to see an increase in our people prioritizing safety.
This has been demonstrated through monthly nominations of colleagues for our bi-monthly Executive Safety Leadership Award. Guided by our environment and sustainability pillar within PGW strategy, group strategy, PGW was pleased to release its sustainability strategy to 2030. This strategy establishes PGW's positioning on a range of key environmental, social, and governance issues. We have targets around greenhouse gas emissions reductions, fleet management, energy efficiency, and social and governance metrics. PGW has committed to reduce its operational Scope 1 and 2 greenhouse gas emissions by 30% by FY 2030 from its 2021 baseline. As part of this commitment, PGW has undertaken a comprehensive process to calculate its current and historic emissions profile, including seeking external assurance. PGW has identified its largest sources of emissions and put in place a series of strategic actions to address these.
PGW has also committed to transparency through public reporting, as aligned our reporting to the Global Reporting Initiative Standards. These standards assist organizations to understand and communicate their impacts on a range of issues such as climate change, human rights, and corruption. The damage caused to our clients from Cyclone Gabrielle and Northern flooding was substantial, with the effects and recovery going to be felt for a number of years to come. While sobering to see the devastation the cyclone caused, it was heartening to see the fabric of our rural communities is strong and resilient. Our local teams did a fantastic job supporting our clients and growers, often while having to deal with their own personal impacts. A lot of staff from around the country traveled to affected areas to help the local teams and provide additional support where needed.
Our people have been outstanding in how they responded to the challenges this event brought to continue to demonstrate how PGW plays an important role in our communities, as well as looking after each other. By working in conjunction with Ag Proud and Federated Farmers to capture donations for distribution to Rural Support Trusts in the impacted areas. Our retail stores and livestock sales collected approximately NZD 32,000, which was distributed to the Rural Support Trust and Federated Farmers, who on the ground are doing great work to support those in need. Internally, PGW raised NZD 115,000 from employees and other donations. I'll now discuss the operational highlights for the business. Some of the operational highlights achieved over the year include the following: Our Fruitfed Supplies crop monitoring business celebrated its 25th year anniversary.
Since the launch of our refreshed Max Rewards loyalty program in November 2022, we've seen a steady membership growth. Our Agritrade business celebrated its 10th anniversary. Our water technicians completed certified training with Valley Irrigation. Our bidr business sold its first dairy herd forward contract online. PGW's young, talented livestock auctioneers achieved a trifecta by winning the first, second, and third in the 11th annual Heartland Bank Young Auctioneers competitions here at Canterbury Park. We achieved a Scope 1 and 2 emissions reduction of 10% from our FY 2021 baseline year. Turning now to the operational performance of our two operating groups, the Retail & Water business and the Agency business. Firstly, the Retail & Water business. This business incorporates Rural Supplies, Fruitfed Supplies, Water, and Agritrade.
Retail & Water's operating EBITDA was an impressive NZD 54.1 million, up NZD 1.6 million on the prior year. Revenue was NZD 785.3 million, up NZD 24 million. The financial year marked another record for our Retail & Water business. Increased sales were recorded in the animal health, fencing, general merchandise, and horticultural merchandise categories. We transacted increased business volumes with the same level of staff, which is something to be very proud of, and a testament to the commitment of our team members. Our clients appreciate the superior technical ability of our people, who are backed by a dedicated research and development team and technology platforms they utilize. We continue to build on this point of difference to ensure we maintain our growth, to grow our market share.
International travel recommenced with COVID-19 travel restrictions, with visits to our suppliers in America, Europe, Australia, and Singapore. These trips are crucial to the business to ensure that we are at the forefront of new research and products coming to the market. These visits also foster and reforge relationships with our suppliers and overseas partners, and create favorable trading partnerships. During the financial year, we invested in the personal development of our teams, with targeted training in sales growth, performance, financial planning, and sales conversations. Technical investments included a fridge sensor trial with Spark to help safeguard products in our care, such as animal health vaccines, horticultural pheromone products, and deer velvet. These products must be kept at controlled temperatures to comply with our insurance obligations, and digitizing the process reduces wastage and improves reliability.
The success of this trial has led to a company-wide rollout being approved. Global supply chain disruptions following the pandemic caused us to carry higher inventories due to ensure we provide our clients with the right product at the right time. Elevated inventory levels caused some challenges with storage and working capital management. As international shipping delays are easing, there is more certainty regarding deliveries, and we have now adjusted inventory levels given that we do not need to be carrying the same quantities of buffer stocks. As part of our continual store improvement program, our Richmond store relocated to a new purpose-built premises. This new store provides enhanced client experience and a better working environment, and improved safety for our teams.
Our Retail & Water property program includes a move to our new stores and our Timaru Rural Supplies and Water teams, and refurbishments of our Waimate and Geraldine stores. Enhancing our retail footprint allows us to accommodate growth, expand existing product ranges, stock new products, and meet the future needs of our clients. The continued investment is a demonstration of our commitment to support our rural communities. The online sales channel has continued its growth, with pleasing performances in the apparel and general merchandise categories. Improvements in user experience and promotional activity were contributing factors to an uplift in sales for the third consecutive year. We continue to see positive flow-on impacts to it in stores through cash sales, from raising awareness of PGW's product range.
Rural Supplies recorded its best trading result to date, exceeding last year's record performance with strong sales across a range of categories. We have continued to grow market share across a range of categories and delivered strong results in a shrinking market. To achieve growth on last year was an exceptional outcome, given the climatic challenges faced and demonstrates the strength of our Rural Supplies business. Our people are passionate and motivated to go the extra mile for our hardworking clients. We are winning new business and seeking opportunities with key accounts in animal health, forestry, and overarching landscape of our traditional business. The marketing team launched a brand awareness and growth campaign entitled, "Working Alongside You, Every Season for the Year." The campaign focuses on our people and their passion to help grow our clients' business, and our support for rural communities.
This spring, this spring, our campaign promotes our technical offering and the value of our technical field representative's offer. Last year, the wet spring conditions contributed to Agchem sales in our Fruitfed Supplies and our horticultural business. Our market share also increased in the vegetable sector, which is an important area in which we're targeting growth. The damage caused by spring frosts and floods across the North Island, and the impacts of Cyclone Gabrielle, the Tairāwhiti, and the Hawke's Bay regions, have impacted the Fruitfed Supplies business over the past few seasons. However, the long-term outlook for horticulture remains positive. Our Fruitfed Supplies business strategic plan focus on adapting to change in the industry, capitalizing on category growth, and how we are proactively and strategically adapt to land use change.
We are really proud of our reputation as leaders, with industry organizations approaching us to assist them in finding solutions. Fruitfed Supplies extended its messaging during this brand campaign, which focused on its innovation capabilities, R&D product trials, and that support the horticultural sector. This is alongside showcase of the crop monitoring expert teams, who work closely with growers to transfer technical knowledge into the field. The campaign provided an opportunity to launch a dedicated Fruitfed Supplies Facebook page, and other channels, including digital airport billboards in the main horticultural regions to increase brand awareness. Our Blenheim branch received its first BRCGS global food safety standard audit clearance, after becoming accredited in 2021. Received a double A rating, which is the highest rating possible.
Having such a globally recognized food safety certification, verifying our quality and products' safety systems, is an important advantage for our clients. The Fruitfed Supplies business also won the Indevin Villa Maria Legends Supplier Award at their annual prize giving. Our crop monitoring business celebrated its 25th anniversary. Crop monitoring scouts provide a valuable service to our clients in monitoring for pests and disease, beneficial insects, and across a range of crops. The water business strategic focus is to add value to our clients' business by growing service delivery and the best technical advice. We're the market leader with the most technical skilled staff, as verified by Valley, the only current Valley-certified field technicians and certified Valley designers in the country. Supply chain issues have eased, and we have delivered a number of pivots on farm. Service review has remained consistent.
Our sales and design crew are actively targeting irrigator upgrade options, and inquiries for in-field irrigation are increasing, specifically where clients see the benefit of a fixed grid solutions. Agritrade, our wholesale business division, celebrated its tenth anniversary in September 2022, and showed good growth over this period. This past financial year has seen another lift in sales revenue, with growth across horticultural imports and animal health products. Our range continues to expand as suppliers look to us to supply product, given our logistics capability and growing reach to merchants and vets across the country. 2023 provided an opportunity to review and improve the Agritrade business structure to deliver further independence and provide greater focus, as we continually look to profitably grow our wholesale business and increase efficiencies.
In addressing sustainability through our logistics supply chain, we're working with the suppliers to assist in reducing our freight carbon emissions. We've also reduced our reliance on LPG through the rollout of electric forklifts, and we're working with Agrecovery on customer-focused plastic recycling solutions. Now moving to the Agency business. Our agency group incorporates the livestock, wool, and real estate businesses. Operating EBITDA was NZD 16.1 million and was down NZD 5.8 million on the prior year's strong result. Revenue was NZD 188.8 million, which is broadly in line with the prior year's result. Our livestock business achieved a solid performance in a difficult market. Whilst there were challenges through softer sheep pricing, significant wet weather events in the North Island, and declined tallies in some stock lines, there were also positive outcomes for the year.
The wet conditions contributed to greater pasture growth than normal, which created trading opportunities during the summer and autumn periods. Revenues received for cattle were robust, with higher prices received compared to the prior year. This was driven by healthy pricing achieved throughout the year, which was assisted by abundant feed and increased export volumes. Cheap pricing was below expectations throughout much of the year, as demand was slow to recover in key export markets. Declines in some tallies were experienced due to land use change, especially for, with conversion of sheep and beef properties to carbon forestry. This is anticipated to slow due to new regulations covering farm to forestry conversions, now requiring resource consents.
Go-Stock, our grazing program, which frees up capital for farmers to invest in other areas of the business, achieved another record year, with the highest balances recorded in terms of values and tallies. During FY 2023, our two significant milestones were reached, with over 350,000 cattle and 2.3 million lambs purchased through Go-Stock since it was launched in 2016. bidr is New Zealand's virtual sale yards, offering real-time live auctions. During the period, bidr's database of buyers grew to over 9,500 users. This growth is driven by continued demand for online bidding and live streaming of cattle sales at sale yards and on-farm auctions. bidr hosted over 900 auctions during FY 2023, including regular weekly sales at 10 sale yards.
Bidr's 100% online offering continues to see an uptick, uptake in niche market, sheep and genetics markets, and elite dairy sales. FY 2023 saw the fruition of developments implemented the prior year, particularly with new auction capabilities, enabling online buyers to pick individual animals for purchase from a pen containing multiple animals. This has proved popular in the dairy and ram markets. The deer and velvet business delivered a strong performance, recording its best trading results. This was achieved through increased in volumes traded in the South Korean health foods customers. China's extended shutdown caused slower sales, with reduced prices in the prior year. With all velvet stock sold and exported, it remains a profitable income stream for deer clients and continues to grow in both production and quality. The genetics business achieved some outstanding results with its bull sales.
The team is investigating the value of beef over dairy strategy, which will benefit dairy farmers seeking genetics for short gestation and maximize ease of birth and increase profitability of cattle. Success in sale yards from a throughput perspective, especially in the North Island, flowed through to on-farm sales. During the period, National Saleyards Limited was successfully established. This new entity operates several jointly owned sale yards across the North Island. Technology innovations include enhancement of our AgOnline, which is the most viewed rural website in the country. The online Blue Dot book upgraded and creates more options for our agents to transact and source information digitally. Overall, the wool business had a solid year, with total bales procured into store in line with the prior year. Wool growers continued to be negatively impacted by strong wool prices.
PGW Wool had another steady, fine wool season, growing market share supported by high-value, long-term Merino grower contracts for growers. The challenges of navigating international supply chains have eased, the impacts of Cyclone Gabrielle continue to pose a challenge for New Zealand's wool supply chain. Woolworks New Zealand Limited, our Awatoto's wool scour, was impacted by flooding, and remediation work is expected to be completed by the end of this year. As wool's natural and sustainable fiber story grows stronger, consumers are beginning to appreciate the environmental benefits of this product. PGW is an active proponent of the advantages of wool and continues to invest in the business. PGW extended its wool contract business by linking growers to manufacturers, both domestically and internationally. We also received increased inquiries for domestic and international retail brands.
We expect the rise in demand for organic wool will see growers supported by price increases in time. In the latter part of the financial year, we saw a significant number of overseas clients visiting our shores to get an on-farm and meet our wool growers. A key focus of clients has been to understand the supply chain for wool and wool production and farming practices. Our Wool Integrity Program provides an assurance that our wool has been ethically grown. During the year, we had released the Wool Integrity marketing video: From New Zealand Wool Sheds to the World. The story follows the wool, wool journey, beginning on-farm and finishing on the other side of the world, where it's manufactured into high-end quality products.
The campaign highlights how PGW Wool and our export subsidiary, Bloch & Behrens, supports growers to produce an ethical fiber that has grown to world-leading farm standards, while also connecting with the global market. PGW Wool extended support for the Campaign for Wool in Schools story where the mobile wool sheds travel across the country, visiting primary and intermediate schools to educate children about the wonders of wool. The real estate business. The real estate market has experienced one of the toughest years in some time, with higher interest rates, stricter regulatory requirements, softened commodity prices, and uncertainty regarding the outcome of the general election, all contributing to negative sentiment. This was reflected in operating results for the PGW's Real Estate, with a decline in market activity leading to significant fewer sales being made than the prior financial year.
On the positive side, we've maintained an increased market share in some regions. While it was pleasing to see PGW Real Estate involved with some large rural properties being transacted, this did not offset the low sale volumes experienced throughout the year, particularly in the lifestyle property market. We launched and refreshed the PGW Real Estate website, which was contemporary with a contemporary design that provides easy accessibility and enhances user navigation. PGW Real Estate expanded its profile in the Wairarapa and Central Hawke's Bay through the acquisition of real estate business with several branches which contribute to increasing our overall market share. We are now into the busy spring period, and it's warming up with increased activity on farm and orchard, with growth rates picking up across the country.
The first quarter got off to a relatively subdued start, with cooler conditions initially and farm and orchard spending indicators back on last year. Farmer and grass sentiment dipped lower, and investment intentions have fallen to the weakest levels since the 1980s, excluding the first COVID lockdown. The good news for us is our market share is steady, and in some areas, we continue to make market gains. While we cannot influence the our customers' spending appetites, we can keep a strong focus on areas of our business that we can control. For example, inventory, cash flow, and operating expenses. These are areas we continue to proactively manage as appropriately to, for the operating environment we are in. Although we are now spending...
We are seeing spending patterns back on discretionary inputs, much of the business we do involve necessary seasonal spend for our customers that is essential for their growing operations. I'll now hand back to Sarah to discuss the outlook for the business.
Thank you, Stephen, for providing an overview of the 2023 financial year and first quarter of 2024. I'll now provide an update on our current outlook. There's a significant degree of volatility in the global economy and international markets currently. New Zealand, like our key trading partner nations, is committed to bringing inflation under control, and we've seen interest rates increase to help achieve that. The effect of this monetary policy is being felt with inflation levels beginning to trend lower, but with elevated interest rates, raising borrowing costs. While PGW is well-positioned operationally, we will see continuing volatility and softening commodity prices for our clients and challenging macro market conditions out over the short to medium- term.
As Stephen mentioned, increased concerns over the outlook for agricultural commodity prices in the year ahead has pushed New Zealand farmer sentiment to record lows, according to the latest Rabobank Rural Confidence Survey. We've seen the movement in dairy forecasts in recent months, along with soft demand for sheep meat. Demand in key markets has declined, and China's economic recovery remains subdued. While some of the sector is recovering from last summer's cyclones, there's also concern about the potential for drought conditions in the coming months due to El Niño weather patterns. These factors combine to hamper confidence and reinforce cautiousness as farmers and growers anticipate impacts on the profitability of their business operations.... While the sector faces a challenging year, this is nevertheless balanced by strong, longer-term fundamentals, and we expect an improvement as the economies in our key markets recover.
The global population and demand for protein is expected to continue to grow, and the fundamentals for the sector remain sound. The longer-term outlook is positive, with the Ministry for Primary Industries projecting steady growth for New Zealand's primary exports, and revenue projected to reach NZD 62 billion by 2027. As a market leader in the agricultural sector, PGW is in a strong position to assist our clients to grow their businesses as they respond to export demand. On balance, we remain cautious about the financial year ahead, given the mixed signals in the macroeconomic environment. As Stephen noted, trading in the first quarter was back on last year, influenced by the factors I've mentioned and a subdued real estate market. Although it remains early in the financial year, we're forecasting an operating EBITDA result for the year to 30 June 2024 of around NZD 52 million.
This is back from last year's strong operating EBITDA result of NZD 61.2 and is based upon our current assessment of a more cautious operating environment. It remains early in the year, and we would hope to be in a better position to assess again after the spring trading period. In the meantime, the business remains focused on continuing to deliver on our strategy and creating value as we enter our key trading period. Ladies and gentlemen, we'll now take questions in relation to our presentation from shareholders or their proxies from the room and then online. Sharon's just bringing you a microphone.
Thank you, Sarah. I'm Oliver from the NZ Shareholders Association.
Mm-hmm.
Look, I just want to firstly acknowledge the good progress that you've made around your environmental and sustainability reporting. I think particularly from what seemed to be a standing start from last year.
Thank you.
We really appreciate that level of disclosure and effort that you've made. I guess at a broader level, I mean, you are working with a constituency. You've talked about farmer confidence at historic lows.
Mm-hmm.
How does that commitment to sustainability, how has that resonated with your farming community, your farming customers, and particularly, I guess with groups within that, such as Groundswell, who have a particular opinion around how that should be reflected?
Stephen, I might perhaps hand to you to answer that from a purely because, as Chief Executive, they're dealing on a more day-to-day basis. I think that might be useful.
Thank you for the question, Oliver. Just to clarify exactly the... Just repeat the question. I heard it, but I just want to clarify the nub of the question.
So look, essentially, I was saying well done on the-
Yes, yes.
efforts you've made so far in sustainability reporting. You've probably heard that, but-
Yeah, I heard it, but...
Yeah.
How has that been? How does PGW's positioning around that, how has that been? How has that resonated within your farming community and your farming stakeholders?
Right.
Particularly with the likes of some of the opinions expressed by the likes of Groundswell as part of that constituency.
Right. So, a couple of parts to the answer there, which is quite a complex question. Firstly, there was, you know, questions around through the COVID times and, you know, what does our margin movement look like across the business? And we were clear about that in communications around the fact that we, we didn't take advantage from a margin perspective, because we, we have 4th- and 5th-generation clients. Turning more broadly to the question, the Groundswell group, and, you know, members of that community and others associated around the sentiments of market, they have some real concerns around what's happening from a regulatory perspective. But there's also, like any community, there are a range of voices.
And where we generally find that those customers who operate in a segment that are closer to the marketplace, the end-user consumer marketplace, they're perhaps more sensitive to the demands of the international market and our trading obligations and, you know, varying trading agreements. That doesn't mean to say they're not concerned, but they're not so vocal around the messaging. It's clear that some of the sentiments that are coming through from the likes of Groundswell and others, I mean, it's not just limited to Groundswell. There are things in there that are of real concern. You know, I...
We were with a customer just last week, and they have to fence about 8 km of river, riverway, and they're going to lose 10 m either side of land, and it's going to cost a considerable amount of money. They weren't opposing of that. They were actually working with council. They weren't. They said, "Let's make things sensible. We know we have to change. We know we have to moderate. We know there's expectation. We know the eyes are on the world." And those customers actually have. They're in a high country lease situation, and they have a large number of customers, overseas business passing through their farm to access national parks. So they're very, very mindful because, because it's with them every day.
So I think that, to round the answer out, the change of government is certainly probably welcomed by the agricultural sector. They're hoping to see some more sensible movement in terms of some of the regulation on the ground. But the general direction of travel around transparency, visibility, our obligations in international marketplaces are more broadly understood across the sector. They, you know, as opposed to the more extreme views, most farmers get the fact that they actually have to do this stuff. They're just wanting to know, make it sensible and also help us fill up with those things that we need to implement.
There are some regulations, without getting into too much detail, there are some regulations there that are preventing some of the products that might help some of the solutions, in the marketplace, and are slow-- They're hard to get regulated, they're hard to get through the process, and hopefully, we see some blockages to help solve some of those problems as well. So, coming back to the point that we made, in the speech, particularly Sarah's part of the speech, New Zealand is uniquely placed. We need the world needs 56% more food over the next 25 years. And that's MPI data. So, it's about the middle of the range of what you see.
That's not that far away, and most of that marketplace is going to be in Africa and Asia. New Zealand's well-placed to position itself with it, particularly against the Asian markets. And that cohort of consumers are digitally savvy. They want to understand the supply chain and its transparency, and they'll use technologies to do that. And if we don't respond, someone else is going to take advantage of that. So that's the reality.
Very thorough answer. Thank you very much.
Hi, my name is David Tennyson. I'm a shareholder. My question really relates, goes back to the time when you had the separation of the seed business, and you were very, shall we say, assiduous in letting us know about financial details around that, and you also carefully outlined what banking covenants and things you had to meet and... So, I mean, I'm quite happy with the way it all went in the end, although personally, I would have rather you kept the seed business, but that's beside the point. My question relates to the fact that all these banking covenants were carefully looked at at the time, but it seems to have gone a bit quiet on what's happening with them now.
I'm just curious, given we're getting into slightly more difficult times, what banking covenants do you have to meet today?
Peter, do you want to take that?
Yeah, sure. So thanks for the question, David. You're right. We do have banking covenants. The banking covenants are pretty well normal banking covenants that you would expect for an organization of our size. You know, senior debt ratio, fixed cost coverage, clean down of our working capital on an annual basis, for example. And all of those are relatively straightforward, and we have a facility that runs for three years, and that's due to expire the sixth of December next year, so sixth of December 2024. We are in compliant with our banking covenants quite comfortably at the moment. So there's no problem with that.
But what we are doing, of course, is we're always talking with our banks and always looking at what do we do in terms of our renewals, and, you know, a three-year cycle comes about pretty quickly. So we're certainly in discussions with our banks on a continual basis, but more... We have a banking committee that's part of the group. And that's got Steve and myself and Garry Moore on it. So we're doing our work on our banking, and of course, in an environment where you've got higher interest rates, it's a little more challenging for all companies actually.
Thanks, thanks, Peter. That's a very thorough answer, except I did notice you carefully omitted any, numerical references.
Yeah. Yeah.
And just following on, the one particular thing I was interested in is the fact that the EBITDA due to the accounting reporting rules-
Yes
the definitions actually changed.
Yeah.
So I was kind of wondering, like, if you look at, say, an EBITDA interest ratio or something for three or four, five years ago, you're going to get a different result to what you have today. So I'm just wondering, how does the-
Yeah.
How do the numbers actually stack up there?
Yeah, it's a very good question. So, you'll remember that previous to the introduction of IFRS 16, leases were designated basically as operating leases. Now, they're classified as financial leases and added back. But when we do our covenant calculations, and that might change in the future, of course, David, as the market matures with leases being embedded into EBITDA. But when we do our covenant calculations, and when the banks do them, we do it on what's called frozen GAAP. Now, frozen GAAP is a sort of a bank term to say, because you've got lease commitments that run for many years, we wanna make sure that that's included in our EBITDA.
The banks actually, we adjust our published EBITDA, if you like, for leases, and then we calculate the covenants on that basis, so it includes leases.
Okay. All right, fair enough. Thank you for that.
Any further questions from the floor?
This is probably a question for U Kean Seng . So you've taken on the chairmanship of PGW as a result of issues associated with Lee Joo Hai earlier in the year. You've taken it as it was described, I think, as an acting measure. So what plans does the board have in terms of the appointment of an independent chair in the future, if any? And your own future chairmanship?
I think this is a position that came to the board all of a sudden because of a discovery of you know personal affairs of our former chairman. And that was a decision that was made you know pretty much instantly on you know collectively at the board. As to the appointment of a independent chair, I think PGW has you know in the past you know appointed a independent chair. I think this position, I think that is something that the board will continue to review. Yeah.
Thank you. And again, just to reiterate that, I think we all appreciate the swift response made by the company in relation to that situation as well. Thank you.
Thank you. Further questions? In that case, I'll respond to questions asked by shareholders online, if there are any. Julian? No, there are not. No questions. If there are no more questions, we'll conclude this part of the meeting. Before I proceed to the remaining agenda items, I'd like to take this opportunity, on behalf of the board, to say our positive trading results in the markets we've seen over the past year are a testament to the incredible dedication and resilience of our entire PGW team. Through our One PGW philosophy, our nationwide team pulled together to serve our clients, communities, and each other in some very difficult circumstances. It was especially gratifying to witness the tremendous spirit demonstrated by our colleagues to support those impacted by the cyclone.
We could not have delivered this outcome without the loyal support of our clients and suppliers in what has been another busy year for the business. Finally, thank you to our shareholders. We are committed to growing the company and appreciate your confidence in us to deliver. We now come to the formal business of the meeting, being an ordinary resolution authorizing the board of directors to fix the remuneration of our auditors. The resolution and accompanying explanatory note are set out in the notice of meeting. As usual, we offer shareholders the option to cast their votes on meeting business by post, email, and in person, and online today. The proposed resolution will be determined by a poll that will be undertaken by our share registrar, Computershare.
The ordinary resolution is to authorize the board of directors of PGW to fix the auditors' remuneration for the financial year for the purposes of Section 207S of the Companies Act 1993. As is usual with audit fees, it's impractical to fix the remuneration at the beginning of the year. Accordingly, the board of directors is seeking authority from the shareholders of the company to fix the audit fees at the appropriate time. Thank you. I'll now move that the resolution, as set out in the notice of meeting, by way of a motion, as an ordinary resolution. A poll will be conducted. For those who have not cast votes already, please do so by clicking on the Vote tab on the right side of your screen.
For those present that have not yet voted, please complete your voting paper and hand this in at the Computershare, Computershare registrar table as soon as is convenient. This concludes our discussion on the items of business. I'll shortly close the online voting system, so please ensure that you have cast your vote on the resolution. While we're waiting, we can address any further questions, if any, in relation to the resolution. I suspect that's unlikely. Please. Sharon, have you. The microphone's just coming from the back of the room.
It's just the question.
Hmm. Thanks, Amanda.
Yes, thank you. I read with interest the Ernst & Young auditors' report for the year, and it struck me that, although it's never an easy thing, in the case of PGW, it's particularly difficult because, particularly with something like the Go-Stock livestock assets, which, well, we've got, rather than being in control of the company, they're actually spread all around the country with different farmers and things. And I was just wondering, how on earth do you audit that in practice? It seems an incredibly difficult thing to do. Would you actually have to go around and, you know, I've got the silly image of people going around and looking for a hole in the fence and thinking, "Oh-
Counting cattle-
You think the lamb might slip through there, and you might lose one or two," and that sort of thing. I'm just wondering on the practicality of how it's done.
Well, the practicality doesn't look quite like that. What I might do is ask Peter, purely because he's dealing with them on a day-to-day basis.
Okay.
Bruce, would you like to respond to that question?
I can only start-
Bruce, sorry, apologies. I'll hand to you.
At a very high level, I mean, we perform procedures around Go-Stock receivables. Essentially, we confirm balances with growers. And we also look at controls that the company has in place in terms of its monitoring of livestock on farm. But that's how we obtain sufficient audit evidence around that aspect of the audit.
Thank you, Bruce. Thank you. The results of the voting on the resolution will be released on the NZX shortly. The meeting is now open for general business. Are there any further matters, discussion, or questions? Well, that completes the business of the meeting. I'll therefore call the 2023 Annual Shareholders Meeting closed. The documents from today's presentation are on the PGW website, and we will post the recording of the meeting there later today. On behalf of the board, I thank you for your attendance and ongoing support. Those in attendance are welcome to stay and join the PGW team here for some light refreshments.